For those that have retired with =>$5M in investable assets

[serie1926]

"serie1926, we're in about the same spot you and your wife are in. My DW is mostly Scottish, and regardless of uniformly successful future projections, she has a very hard time walking away from a salary. It's not a rational fear, but it's something we have to find some way to deal with. I understand your desire to be reassured by success cases that are similar to yours. I was hoping I might be able to point one or two out to my DW also."

Thank you!

 

[hnzw_rui]

1000 per month on travel is a lot of travel. family of 4 traveling internationally from the USA for the holidays might be 6K on a nice trip including international airfare. You must be traveling far, often, and staying in high high end places.

We travel to the Philippines once every 2-4 years and (economy) airfare alone can eat up ~$5,000-8,000 for a family of 4. I think on our last vacation, we spent something like $18,000 all-in (a significant portion of which are gifts).

Mind, we're in SoCal and live on less than $6,000 a month (not including savings). Of course, we're lucky the rent for our 2B/2B apartment hasn't increased too much (from $1,000 10 years ago to $1,500 now). Similar apartments are now going for $2,800+.

But, regardless, if it takes that much to live in CA, Southern or Northern, it does not matter, then how do most of Californians afford to live there? The majority of them must be living in slums and eat ramen year round (ramen is cheaper than cat food).

Not all of SoCal is expensive. It's just areas near Metro LA and San Diego.

Housing is the biggest expense. If you're lucky enough to have housing covered (purchased property before housing boom with fairly low property taxes thanks to Prop 13, living with parents, etc), it's actually not so bad. Living in the suburbs (where houses are cheaper) is also an option. Just be prepared for a 2-hour or longer one-way commute.

There are also plenty of illegal immigrants in LA (typically border jumpers from Mexico). You can frequently see a bunch of them hanging around Home Depot. Not sure what they eat but food is pretty cheap anyway (if you're spending $2,000/mo on groceries and restaurants, then you probably have pretty high end tastes). For housing, they sometimes have 10-15 people living in one apartment. Health insurance? What health insurance? Also no car. Just walk or take the bus.

 

[papadad111]

For those that have retired with =>$5M in investable assets

We travel to the Philippines once every 2-4 years and (economy) airfare alone can eat up ~$5,000-8,000 for a family of 4. I think on our last vacation, we spent something like $18,000 all-in (a significant portion of which are gifts).



Mind, we're in SoCal and live on less than $6,000 a month (not including savings). Of course, we're lucky the rent for our 2B/2B apartment hasn't increased too much (from $1,000 10 years ago to $1,500 now). Similar apartments are now going for $2,800+.





Not all of SoCal is expensive. It's just areas near Metro LA and San Diego.



Housing is the biggest expense. If you're lucky enough to have housing covered (purchased property before housing boom with fairly low property taxes thanks to Prop 13, living with parents, etc), it's actually not so bad. Living in the suburbs (where houses are cheaper) is also an option. Just be prepared for a 2-hour or longer one-way commute.



There are also plenty of illegal immigrants in LA (typically border jumpers from Mexico). You can frequently see a bunch of them hanging around Home Depot. Not sure what they eat but food is pretty cheap anyway (if you're spending $2,000/mo on groceries and restaurants, then you probably have pretty high end tastes). For housing, they sometimes have 10-15 people living in one apartment. Health insurance? What health insurance? Also no car. Just walk or take the bus.

Interesting. I lived in Asia for 25 years and never paid more than 1200 -1400 per ticket - round trip - per pax for me and my family depending on the exact location.

Shopping the airfare deals I usually could land under $1000 per person even around major holidays. I also earned lots of miles and used those points at times to defer the cost.

I've done it for less than $600 round trip too on major USA carriers.


Manila is cheap. I Lived there for 5 years. Top notch shangrila hotel in makati was less than 100 bucks per night. Beachfront 5 star was 120 per night tops.

18 grand - wow - you provided mana from heaven and college education plus an iPhone for everyone in the family !

But that's still only 4-5 grand on an annual basis .. is a lot different than spending 12 grand every year.

Anyway. Like I said. It's about lifestyle inflation.

I tend to see Californians whine about the expense but a lot of it is entirely controllable and it's more an attitude of keeping up with the jones's and having something to post on brag-book.

 

[Neill]

Actually, quite disappointed no one answered the question. Mostly folks trying to be funny.

I quit working in Aug last year at 50. Portfolio can sustain about 220k/year according to firecalc. I don't really have a budget because we already spend way under that. Still got young kids so we can't travel a lot yet.
I knew I could live on the portfolio income alone since I had done it for 3+ years while I put all my income in deferred comp.
Not much time has gone by and I want to leave everything the same for a year but I am starting to think we need to spend more. I don't think it makes sense to have the portfolio grow more if we could use the money to do stuff we want to. Of course we do what we want to but I make trade-offs for cheaper stuff.

 

[NW-Bound]

FWIW, the OP, Serie1926, shows on his profile that he lives in Texas.

But, regardless, if it takes that much to live in CA, Southern or Northern, it does not matter, then how do most of Californians afford to live there? The majority of them must be living in slums and eat ramen year round (ramen is cheaper than cat food).

Not all of SoCal is expensive. It's just areas near Metro LA and San Diego.

Housing is the biggest expense...

It was just a sarcastic question. I have many relatives and friends living in CA, and have visited them frequently over that past 40 years. I know the living condition there, including high home prices, and Prop 13, Mello-Roos tax, etc... I would not want to be there, unless I had enough to live in areas like the Pacific Palisades. But then, with that kind of money, a waterfront home on Bainbridge Island is more to my lifestyle. I cannot stand traffic and crowded conditions.

I almost took a job in Santa Monica in 1984, but reneged on the job offer when I found out that I could afford to live only in Thousand Oaks if I wanted to get a decent home in my price range (a bit less than $200K back then). Closer in town, the homes were just too old and small for me. Yes, they even flew my wife out there to go look for houses with me.

 

[hnzw_rui]

Interesting. I lived in Asia for 25 years and never paid more than 1200 -1400 per ticket - round trip - per pax for me and my family depending on the exact location.

Shopping the airfare deals I usually could land under $1000 per person even around major holidays. I also earned lots of miles and used those points at times to defer the cost.

I've done it for less than $600 round trip too on major USA carriers.

Manila is cheap. I Lived there for 5 years. Top notch shangrila hotel in makati was less than 100 bucks per night. Beachfront 5 star was 120 per night tops.

18 grand - wow - you provided mana from heaven and college education plus an iPhone for everyone in the family !

We rarely travel by air so no airline miles that can be used to defray cost of airfare. At $1200-1400/pax, that's $4800-5600 for a family of 4. We take Philippine Airlines because it's the only airline that has nonstop flights and during Christmas season, airfare can go up to $2000+/pax. We generally try to buy airfare as early as possible though so max we've spent is $5200 (when gas prices were still high). The 2B/2B condo rental with utilities was a little less than $2000 (1 month stay) which was cheaper than paying per night at a decent hotel.

$18k for iPhones for the entire family? Not even close. I reckon $50k still wouldn't cut it. My parents have a ton of niblings and grandniblings. Mom has 7 siblings and some of those siblings have more than 7 children who in turn, have children of their own. Dad has a ton extended family.

Of course, the problem with our expenditures every time we go to the Philippines is mostly cultural. Filipinos returning from abroad ("balikbayan") are seen as rich and are expected to be Santa Claus (unfortunately, dad tries to live up to this perception). It's not just one-way for gifts or "pasalubong" either. You get gifts for both legs of the trip (thankfully, the pasalubong when going back to the US are much cheaper). My personal spending money for that trip was $1000. I think I spent $500 tops for some shopping and several lunches and dinners out with friends (my treat). Without the generous gift-giving, I peg our actual expenditures at $10k.

Now if we were actually living in Manila, $2000/mo would be quite comfortable and that includes pay and SS benefits for a couple of household helpers. No more expectations for generous gift giving.

But that's still only 4-5 grand on an annual basis .. is a lot different than spending 12 grand every year.

That's because we only go once every few years. If, instead, a family of 4 went on, say, a trip to Europe annually, I can easily see how expenses might run 12 grand a year.

Mind, yes, $1k/mo on travel is a lifestyle choice and the expenses will probably run around the same regardless of where you live in the US. The $7k/mo in additional expenses for SoCal ($84k/year!) posted by rrppve is really mostly just unnecessary spending.

 

[aja8888]

I almost took a job in Santa Monica in 1984, but reneged on the job offer when I found out that I could afford to live only in Thousand Oaks if I wanted to get a decent home in my price range (a bit less than $200K back then). Closer in town, the homes were just too old and small for me. Yes, they even flew my wife out there to go look for houses with me.

TO is where we settled (left Connecticut w/DW and two toddlers) in 1982 when I went to work for ARCO in downtown LA. TO is (was) great back then but now it has been overrun. Not quite the Valley, but close. You can't get a two car garage there for $200K now.

It's all about how you spend your money. In Tx we have maids twice per month for $140 total and I "do" the grass and the car maintenance.

 

[NW-Bound]

For that money back then, we saw many homes in Thousand Oaks that we liked. However, we discovered that the drive to Santa Monica was terrible (even back then!), and I could not see myself doing that twice a day. Life is too short to be stuck on the freeway breathing exhaust fumes. Hence, after a bit of reflection, I reneged on the job offer that I already accepted. They thought that I was holding out for more money, but at that point I saw that they would not pay the kind of money it would take me to relocate there.

 

[NW-Bound]

Just now, look on Zillow and there's no 3BR house under $1.5M in Thousand Oaks!

And the $200K back in 1984 is only about $450K today. Homes in CA appreciated much more than inflation.

 

[aja8888]

Just now, look on Zillow and there's no 3BR house under $1.5M in Thousand Oaks!

And the $200K back in 1984 is only about $450K today. Homes in CA appreciated much more than inflation.

I should have stayed, but can't complain leaving in 1992 and had a 2,600 sq. ft. house and a 1,300 sq. ft. rental condo at that time. Prices really went crazy after 2000. You can thank Amgen for that.

 

[rodi]

Just now, look on Zillow and there's no 3BR house under $1.5M in Thousand Oaks!

And the $200K back in 1984 is only about $450K today. Homes in CA appreciated much more than inflation.

Um... there are a LOT of 3br+ houses in Thousand Oaks for less than 1.5M.
https://www.redfin.com/city/19798/CA/Thousand-Oaks/filter/property-type=house,max-price=1.5M,min-beds=3

Some may be dumps... but there are a lot of houses that fit the stated criteria. Maybe not listed on Zillow... but Redfin scrapes the MLS - not just stuff realtors have input.

 

[serie1926]

"I quit working in Aug last year at 50. Portfolio can sustain about 220k/year according to firecalc. I don't really have a budget because we already spend way under that. Still got young kids so we can't travel a lot yet.
I knew I could live on the portfolio income alone since I had done it for 3+ years while I put all my income in deferred comp.
Not much time has gone by and I want to leave everything the same for a year but I am starting to think we need to spend more. I don't think it makes sense to have the portfolio grow more if we could use the money to do stuff we want to. Of course we do what we want to but I make trade-offs for cheaper stuff."

Thank you!

 

[NW-Bound]

Um... there are a LOT of 3br+ houses in Thousand Oaks for less than 1.5M.
https://www.redfin.com/city/19798/CA/Thousand-Oaks/filter/property-type=house,max-price=1.5M,min-beds=3

Some may be dumps... but there are a lot of houses that fit the stated criteria. Maybe not listed on Zillow... but Redfin scrapes the MLS - not just stuff realtors have input.

Thanks. Starting at around $700K, the houses look quite decent, like the ones we were looking at. That is still a lot more appreciation than inflation over 30 years.

Just go back to Zillow, and I now see the same decent homes below $1M. What happened? Operator error, apparently.

 

[aja8888]

Um... there are a LOT of 3br+ houses in Thousand Oaks for less than 1.5M.
https://www.redfin.com/city/19798/CA/Thousand-Oaks/filter/property-type=house,max-price=1.5M,min-beds=3

Some may be dumps... but there are a lot of houses that fit the stated criteria. Maybe not listed on Zillow... but Redfin scrapes the MLS - not just stuff realtors have input.

Those are the oldest and (almost) worst neighborhoods in TO. Even one of those would buy me 4 of what I have in TX now.

 

[hesperus]

I'll bite. To answer your question, last year we were at $5M investable. The correction has put us under now by about 10%. Fortunately, we keep about 8% of our investable assets in cash, so we don't dip into the portfolio in a downturn. We live on a budget of under 100K per year, usually more like 65-70K, with no debt. The rest of dividends and interest income is re-invested back into the portfolio. The urge to spend more is always there, but we have always been LBYM, and that is a hard habit to break. We seem to be searching for an age and asset 'appropriate' amount to spend while keeping an eye on the long term horizon. Although I'm sure we could spend more, it's hard to open those floodgates to higher spending. We still may have 30+ years as a horizon (I'm 57, DW is 48), so my eye is always looking out that far. The spending 'creep' we have experienced over the last few years seems to come naturally, and almost too easily. We still cut our own lawn, fly coach, buy used (but newer) cars, and live in a modest home. For me, the security that the portfolio gives us outweighs the satisfaction I may get from spending more. But I'm often reminded to enjoy it while we're still fairly young.

 

[audreyh1]

"I quit working in Aug last year at 50. Portfolio can sustain about 220k/year according to firecalc. I don't really have a budget because we already spend way under that. Still got young kids so we can't travel a lot yet.
I knew I could live on the portfolio income alone since I had done it for 3+ years while I put all my income in deferred comp.
Not much time has gone by and I want to leave everything the same for a year but I am starting to think we need to spend more. I don't think it makes sense to have the portfolio grow more if we could use the money to do stuff we want to. Of course we do what we want to but I make trade-offs for cheaper stuff."

Thank you!

How much will taxes on portfolio income eat into that 220K?

When you aren't working, you have a lot more time available to spend money!

 

[redduck]

My guess is there will be quite a few responses to this post but not many will be on topic.

I can't imagine what you are basing your guess on.

By the way, I sure am glad that the New England Patriots won't be playing in the Super Bowl.

 

[Running_Man]

For the 200K annual spending pretax it is not a large enough portfolio at early 50's. Should target a 3% withdrawal which means 6.7 million dollar portfolio if you include taxes in the 200K. There is no reason you need to justify your 200K in spending nor cut it down, this works out to simple mathematics and probability and the odds are you would be cutting down your spending in your 60's when you wouldn't want to, so you should continue to add funds to get to the retirement you would prefer

 

[serie1926]

"I'll bite. To answer your question, last year we were at $5M investable. The correction has put us under now by about 10%. Fortunately, we keep about 8% of our investable assets in cash, so we don't dip into the portfolio in a downturn. We live on a budget of under 100K per year, usually more like 65-70K, with no debt. The rest of dividends and interest income is re-invested back into the portfolio. The urge to spend more is always there, but we have always been LBYM, and that is a hard habit to break. We seem to be searching for an age and asset 'appropriate' amount to spend while keeping an eye on the long term horizon. Although I'm sure we could spend more, it's hard to open those floodgates to higher spending. We still may have 30+ years as a horizon (I'm 57, DW is 48), so my eye is always looking out that far. The spending 'creep' we have experienced over the last few years seems to come naturally, and almost too easily. We still cut our own lawn, fly coach, buy used (but newer) cars, and live in a modest home. For me, the security that the portfolio gives us outweighs the satisfaction I may get from spending more. But I'm often reminded to enjoy it while we're still fairly young."

Thank you, great insight!

 

[rodi]

serie1926 -
There is a "Quote" button at the bottom of each post. This will automatically include a link to the post you are quoting, and display who you are quoting. It makes it much easier for folks reading your responses with quotes to follow. If you're using the mobile app you tap the post you want to quote and the option to quote will appear at the top of the screen.

I hope this helps.

 

[serie1926]

serie1926 -
There is a "Quote" button at the bottom of each post. This will automatically include a link to the post you are quoting, and display who you are quoting. It makes it much easier for folks reading your responses with quotes to follow. If you're using the mobile app you tap the post you want to quote and the option to quote will appear at the top of the screen.

I hope this helps.

Brilliant! Learn something new everyday. Thank you!

 

[HFWR]

The reason I started participating in "retirement forums" was to gain experience from others who weren't willing to trade any more life for more money (and the other assorted nonsense of having a j*b). But I'm in an entirely different sphere than those who are trying to maintain a $200k/yr lifestyle. Granted, everyone has to live on whatever they have accumulated, but it just seems more challenging to retire on $0.5m than to retire on $5.0m. It's a nice problem to have; I just can't relate...

 

[ERD50]

Originally Posted by ERD50 View Post
It is?

I thought it was for finding the point where your portfolio would be depleted if, and only if, the future was as bad as the worst of the past (depending what % historical success you used).

And with the default 95% success rate, that means that 95% of the historical time periods, your portfolio would not be depleted. And ~ 1/2 the time you have as much buying power as when you started, and sometimes MUCH more.

-ERD50

This is a good comment! I'd be interested to learn what others believe FC does or at least a confirmation.

If the above is true, it is news to me in a way. Something I sort of knew but hadn't had it spelled out so clearly.

Anyone?

Well, please do your own due diligence on it, that's always best, but I was not expressing it as an opinion, I was stating it as a fact. It really is what FireCalc does. See the refs that REWahoo provided as well.

That's no fun. We have to try harder to deplete it! So far, we have doing a poor job after 14 years, in spite of occasional market swoons.

And that's fine, but always a bit tough, as we never know what the future offers, and conservative people like to keep a buffer.

But there are withdraw methods that can help. I forget the name offhand, the boglehead wiki probably discusses it, but essentially using the RMD tables as a start, and using a WD rate that is designed to draw down your portfolio as you age. They make it more conservative by subtracting ten years or so from your age, so tyou are still leaving some in reserve.

Over-simple example (check the RMD tables and sources) - if you plan to deplete your portfolio in 20 years, your WDR for that year is 1/20th of your portfolio (5%). Next year it is 1/19th (5.26% of remaining portfolio), etc. Basically like that.


-ERD50

 

[ERD50]

"I'll bite. To answer your question, last year we were at $5M investable. The correction has put us under now by about 10%. Fortunately, we keep about 8% of our investable assets in cash, so we don't dip into the portfolio in a downturn. We live on a budget of under 100K per year, usually more like 65-70K, with no debt. ...

While that would be a generally accepted conservative 2% WR, I just realized you are also posting in another thread that you use an FA that you are happy with. If that FA charges the typical 1% (I don't think you ever came back to address fees), and puts you in funds with higher than 0.18% ERs used as the default in FIRECalc, that 2% WR is not as conservative as it appears on the surface. Maybe even far worse if those FA funds under-perform (before fees - so we don't double count them) a simple index approach, which statistically, is likely the case.

edit - ooops, I guess your not using the quote function threw me off, that is maybe directed at someone else? Either way, the point stands.

-ERD50

 

[urn2bfree]

While that would be a generally accepted conservative 2% WR, I just realized you are also posting in another thread that you use an FA that you are happy with. If that FA charges the typical 1% (I don't think you ever came back to address fees), and puts you in funds with higher than 0.18% ERs used as the default in FIRECalc, that 2% WR is not as conservative as it appears on the surface. Maybe even far worse if those FA funds under-perform (before fees - so we don't double count them) a simple index approach, which statistically, is likely the case.

edit - ooops, I guess your not using the quote function threw me off, that is maybe directed at someone else? Either way, the point stands.

-ERD50

Can we please quoting 1% as "typical." I would call it "ridiculous," "excessive", or even accept "all too common." But "typical" gives it the sort of inevitability and cloak of acceptability it does NOT deserve. Psychologically this is called "anchoring."

There are many different options for FA fees and the sooner we knock the legs out of the absurd notion that 1% is the reference, the better off consumers will be.

N. B. - I pay a flat fee that thanks to the size of my portfolio amounts to less than 0.07%. As my portfolio grows only I benefit by getting more money. The FA gets the same money for the same work and I pay an even lower percentage.


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